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Hello Tutor,
Standard says, ” the board are aware that the definition of a business can be difficult and judgemental to apply. As such there is a concentration test……”
“The concentration test is met ( i.e. the acquired assets are not a business) if substantially all of the fair value of the total assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.”
Could be please explain this concentration test in easy words?
Thank you.
Please don’t quote standard numbers on exam – inevitably you will quote the wrong one 🙂
I buy a company. The company owns a building and nothing else. No activity is being carried on in the building. There are no staff.
Question – in substance have I bought a company or a a building.
Answer – I have bought a building. So I will show IP as an asset instead of an investment in my own FS.
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